US GAO says Pipeline Safety Fund accounting needs retooling

By the OGJ Online Staff

WASHINGTON, DC, May 3 -- The General Accounting Office this week told Congress that the US Department of Transportation's Research and Special Programs Administration should revamp the way it calculates the budget of a sister agency that oversees pipeline safety.

The department's Office of Pipeline Safety is responsible for the oversight of natural gas and oil pipelines along with liquefied natural gas storage facilities.

Most of the OPS budget is funded from industry user fees. However, about 15% of the $36.9 million of the agency's 2000 budget came from another fee-based program called the Oil Spill Liability Fund. And less than 1% of the budget came from the taxpayer-financed Pipeline Safety Fund, an account that is only to be used if user fees are temporarily unavailable.

GAO said Apr. 30 DOT used "incorrect or unreliable data and inappropriate assumptions in [its] calculations of the minimum PSF balance." This resulted in regulators "overstating" the safety net needed to keep the OPS office running until a new round of user's fees kicked in. On Sept. 30, 2000, the balance in the PSF was $16.8 million, GAO said.

DOT "generally" agreed with the agency's finding and said in an Apr. 16 letter it was in the midst of updating data collection via a new internet-based system to allow pipeline operators to electronically enter pipeline mileage and other information into the system.

Two days after DOT wrote GAO, Stacey Gerard, associate administrator of OPS, urged pipeline companies to collaborate more on the sharing of safety information.

"Web-based technologies have so much potential for the sharing of what one operator used and benefited from. They could also facilitate alerting operators, regulators, and others to the existence of new standards, practices, and measures of effectiveness," she told the American Petroleum Institute's pipeline conference in San Antonio, Tex. (OGJ Online, Apr. 18, 2001).

GAO conducted its analysis at the directive of the Senate Committee on Appropriations.

The report comes at a time when Congress is considering stricter oversight of the nation's aging pipeline system. A bill passed by the Senate in February would require pipelines to be inspected every 5 years and would raise civil penalties for pipeline safety violations. The House has yet to act on the measure, although several proposals are circulating.